George Lucas's film production company has abandoned plans to build a sprawling studio north of San Francisco, saying it has no desire to be seen as "an evil empire".

Lucasfilm Ltd., the force behind the Star Wars movies, surprised Marin County by announcing that it had dropped the controversial Grady Ranch project, citing bitter opposition from neighbours and delays in the approval process.

The company said it would construct new facilities elsewhere and hoped to sell the historic farmland to a developer interested in building low-income housing in an area about 15 miles north of the Golden Gate Bridge.

"We love working and living in Marin, but the residents of Lucas Valley have fought this project for 25 years, and enough is enough," the company said in a statement. "We have several opportunities to build the production stages in communities that see us as a creative asset, not as an evil empire."

The Grady Ranch project would have marked a major expansion of Lucasfilm in Lucas Valley, which has been home to its Skywalker Ranch for three decades. The valley is named for a 19th century rancher with no relation to the Star Wars creator.

The plan called for a 269,000-square-foot digital media studio that would include a 51-foot tall, mission-style compound with two 85-foot towers, two indoor sound stages as well as an outdoor stage of nearly 7,000 square feet. There would be screening rooms, guest housing, a general store, employee cafeteria and wine cave for private tastings and storage.

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The company and its backers said the new production studio would generate hundreds of high-paying jobs and tax revenue. Lucasfilm hoped to break ground by next year.

But the project generated strong opposition from home owners and environmentalists who said it would increase traffic, noise and environmental damage on the pristine countryside, despite company promises to preserve open space and reduce impacts on the community.

The Marin County planning commission unanimously approved the studio project in February, but opponents appealed that decision to the county Board of Supervisors last month, leading to further delays.

"The level of bitterness and anger expressed by the home owners in Lucas Valley has convinced us that, even if we were to spend more time and acquire the necessary approvals, we would not be able to maintain a constructive relationship with our neighbours," Lucasfilm said in the statement.

Liz Dale, president of the Lucas Valley Estates Homeowners Association, said she was surprised by the decision.

"We are glad we don't have to worry about the potential impacts we were worried about," Dale said. "We don't want to describe it as good news or bad news, but I can understand why another location would be better for this type of facility."

Dale said any proposed housing development on the property would have to be "suited to the zoning, the people who live here and the people who come here."

Local business leaders who championed the project said they were devastated by the announcement.

"It sends a very disturbing message to any company thinking about growing or starting in Marin," said Cynthia Murray, president of the North Bay Leadership Council. "It's a model project. If this project can't get approved, I don't know what project can get approved."

Lucasfilm spokeswoman Lynne Hale said two cities have reached out to the company offering "substantial incentives" to build the new studio, but she could not discuss specific locations. The firm is already in talks with developers about selling Grady Ranch, she said.

"It makes me sad that we cannot build the studio in Marin," Hale said. "Other communities understand the economic and educational benefits of having a company such as Lucasfilm in their cities."